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PETITIONER:

SATWANT SINGH SODHI

Vs.

RESPONDENT:

STATE OF PUNJAB & ORS.

DATE OF JUDGMENT: 26/03/1999

BENCH:

S.R.Babu

JUDGMENT:

RAJENDRA BABU, J. :

Leave granted.

In relation to the construction of High Level Bridge

over river Ghaggar on Pehawa Road at Devigarh, an agreement

was entered into between the appellant and the respondents.

The disputes between them arose in respect of certain claims

made by the appellant and the matter was referred to

arbitration (respondent No.3) pursuant to an order made by

Sub-Judge (1st Class), Patiala. The appellant submitted his

claim before the Arbitrator and sought for an interim award

in respect of Item No.1 with a claim for 18% compound

interest from 1.2.1981 to 15.3.1992. The Arbitrator, by

award made on November 26, 1992, awarded a sum of Rs.7.45

lacs in respect of Item No.1 with interest @ 18% compound

yearly from 1.2.1981 to 15.3.1992. On January 28, 1994, the

Arbitrator made another award inclusive of Item No.1 and

awarded a sum of Rs.3,75 lacs and interest @ 12% per annum

with effect from 1.2.1981 to 15.3.1992 on the amount and

also in respect of other claims. The appellant made an

application under Section 14 of the Arbitration Act, 1940

(hereinafter referred to as the Act) for making the awards

dated November 26, 1992 and January 28, 1994 as the rule of

the court. The trial court made the award as the rule of

the court holding that the interim award in regard to Item

No.1 should be made the rule of the court and that award

having covered Item No.1 should not be taken note of in the

award made on January 28, 1994. Thereby the trial court

took the view that interim award made on November 26, 1992

is liable to be made the rule of the court with regard to

Item No.1 and that Item No.1 of the award made on January

28, 1994 will merge in the same deciding that aspect of the

matter against the respondents and in favour of the

appellant. The award dated January 28, 1994 was ordered to

be made the rule of the court except for Item No.1 for which

interim award has already been granted.

Respondent Nos.1 and 2 preferred an appeal before the

High Court which was allowed by holding that the trial court

fell in error in making the interim award the rule of the

court which was superseded by the final award made on

January 28, 1994.

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In these appeals by special leave, the appellant

contended that on the award being made by the Arbitrator

insofar as Item No.1 was concerned it became final but the

High Court lost sight of the fact that it was not open to

the Arbitrator to revise the Award made by him earlier as he

had become functus officio. It is submitted that the High

Court erred in holding that the award made on November 26,

1992 was not pronounced though it was made and signed by the

Arbitrator and, therefore, was open to be corrected.

Assailing this conclusion, it was contended that the

Arbitrator has to make and sign the award and it is valid in

law if he does so and merely because no notice has been

given to the parties it cannot be held to be invalid and

notice to the parties could be postponed. The requirement

of making and signing the award simultaneously is sufficient

to result in binding award. It was next contended that the

view of the High Court that the Arbitrator himself

superseded the award made on November 26, 1992 by treating

it to be an interim award was erroneous and it was submitted

that the interim award having been made and being final in

character it was not open for modification or alteration

except in terms as provided in Section 13(d) of the Act.

The trial court adverted to the facts leading to the

award being made on Item No.1. The appellant claimed for

interim award in respect of Item No.1 for Rs. 10,05,422/-

with compound interest @ 18% with effect from 1.2.1981 to

15.3.1992. The Arbitrator made an award on Item No.1 to the

tune of Rs.7.45 lacs with interest @ 18% compound per annum

from 1.2.1981 to 15.3.1992 after examining the oral and

documentary evidence and after considering the arguments and

counter arguments. It is necessary to notice the manner in

which the Arbitrator dealt with this aspect of the matter in

the award made on January 28, 1994. At page 3 of the award,

the Arbitrator has mentioned as under :

The Executive Engineer, Provincial Division No.2, PWD

B&R Branch, Patiala informed during the hearing on December

2, 1992 that the Honble High Court heard the case on

November 23, 1992 and subsequently on December 2, 1992 and

stayed the operation of the arbitration proceedings. In

view of the order of the learned court dated September 23,

1992, the proceedings were taken up and both parties

appeared on various dates. After hearing the parties and as

per the directions regarding the finalisation of the interim

award as the case in respect of Item No.1 was heard and was

considered to announce interim award but in view of the stay

granted on December 2, 1992 which was informed by the

Executive Engineer, Provincial Division No.2, Patiala on

December 2, 1992 during the hearing the award as such was

not announced, which has been incorporated in the present

award as given hereinbelow.

The question whether interim award is final to the

extent it goes or has effect till the final award is

delivered will depend upon the form of the award. If the

interim award is intended to have effect only so long as the

final award is not delivered it will have the force of the

interim award and it will cease to have effect after the

final award is made. If, on the other hand, the interim

award is intended to finally determine the rights of the

parties it will have the force of a complete award and will

have effect even after the final award is delivered. The

terms of the award dated November 26, 1992 do not indicate

that the same is of interim nature.

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Section 14 of the provides that when the arbitrator or

umpire has made his award, he shall sign it and shall give

notice in writing to the parties of the making and signing

thereof and of the amount of fees and charges payable in

respect of the arbitration and award. In the language of

the Section, an award will be complete as soon as it is made

and signed. Thus mere writing of an award would not amount

to making of an award. There can be no finality in the

award except when it is signed because signing of the award

gives legal effect to it and to give validity to an award.

It is not necessary that it should also be delivered or

pronounced or filed in the court. Making and delivery of

the award are different stages of an arbitration proceeding.

An award is made when it is authenticated by the person who

makes it. The word made suggests that the mind of the

Arbitrator as being declared and it is validly deemed to be

pronounced as soon as the Arbitrator has signed it and once

an award has been given by the Arbitrator he becomes functus

officio. If this is the position in law, it becomes

difficult to support the view taken by the High Court in

stating that the interim award was not pronounced though it

was made and signed by the Arbitrator. If he had made the

award the question of superseding the same could not arise.

Therefore, the view of the High Court appears to us to be

fallacious. On this aspect of the matter we may refer to

some of the decisions on the aspect as to when an award

becomes final. In Janardhan Prasad vs. Chandrashekhar, AIR

1951 Nagpur 198, after examining the scope of Section 14 of

the Act, it was held as follows :

the award becomes valid and final so far as the

arbitrators or umpire are concerned the moment it is made

and signed by them. The provision for giving notice in

writing to the parties of the making and signing thereof and

of the amount of fees and charges payable in respect of the

arbitration and the award is for the purpose of limitation

under Art. 178 of the Limitation Act, entitling either

party to apply to the Court for the filing in Court of the

award.

No time is fixed for the giving of such notice by the

Arbitrator and it has been held in several cases that it may

be done within reasonable time either by the Arbitrator or

by his agent. A notice may be given to one party and may

not be given to another party for a much longer period. It

cannot be said that an award becomes final so far as the

first party is concerned and no as against the other

entitling the Arbitrators to scrap the award and make a

fresh one.

There is thus a fundamental difference between

the making, signing and delivery of a judgment and making

and signing and giving notice of an award. In the former

case all three must be simultaneous acts and parts of the

same transaction. In the latter case the first two may be

simultaneous and the notice of the award can be postponed.

That award does not become invalid because notice of

the making of it has not been given. An Arbitrator is

entitled to file an award in Court under Section 14,

sub-s.(2). If he does so, the Court is bound to give notice

to the parties of the filing of the award.

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The circumstances in which these observations are made

by the court are as follows :

The Arbitrators had made and signed an award on

January 11, 1944 which was registered on January 13, 1944.

Thereafter the Arbitrators made a second award on January

26, 1944. It was contended that as they did not pronounce

the award by issuing a notice of having signed it, they had

not become functus officio and could, therefore, make and

deliver the second award dated January 26, 1944. The

learned Judges of the High Court refused to hold that the

first award was not final and could be superseded by the

second award because no notice was given before January 26,

1944. This view was followed by the Andhra Pradesh High

Court in Badarla Ramakrishnamma & Ors. vs. Vattikonda

Lakshmibayamma & Ors., AIR 1958 Andhra Pradesh 503, at pare

2. Again in Ram Bharosey vs. Peary Lal, AIR 1957 All.265,

it was observed as under :

It is true that in the present case the Arbitrators

did not give notice to the parties of the making and the

signing of the award. But the arbitrators after making and

the signing the award filed it in the court. The validity

of the award does not depend upon the notice of the same

being given to the parties. When an award is duly make,

signed and filed in Court it is a valid document.

This position was reiterated in Asad-ul-lah vs.

Muhammad Nur, ILR 27 All. 459(A) and it was held that :

for the making of an award it is enough that the

Arbitrators act together and finally make up their minds and

express their decision in writing. This writing must be

authenticated by their signatures. The award is thus made

and signed and is complete and final so far as the

Arbitrators are concerned.

This Court in Rikhabdas vs. Ballabhdas & Ors., 1962

(1) SCR Supp. 475, held that once an award is made and

signed by the Arbitrator the Arbitrator becomes functus

officio. In Juggilal Kamlapat vs. General Fibre Dealers

Ltd., 1962 (2) SCR Supp. 101, this Court held that an

Arbitrator having signed his award becomes functus officio

but that did not mean that in no circumstances could there

by further arbitration proceedings where an award was set

aside or that the same Arbitrator could never have anything

to do with the award with respect to the same dispute. Thus

in the present case, it was not open to the Arbitrator to

re-determine the claim and make an award. Therefore, the

view taken by the trial court that the earlier award made

and written though signed was not pronounced but

nevertheless had become complete and final, therefore,

should be made the rule of the court appears to us to be

correct with regard to Item No.1 inasmuch as the claim in

relation to Item No.1 could not have been adjudicated by the

Arbitrator again and it has been rightly excluded from the

second award made by the Arbitrator on January 28, 1994.

Thus the view taken by the trial court on this aspect also

appears to us to be correct. Therefore, the trial court has

rightly ordered the award dated January 28, 1994 to be the

rule of the court except for Item No.1 and in respect of

which the award dated November 26, 1992 was ordered to be

the rule of the court.

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In the circumstances aforementioned, we have no option

but to reverse the view taken by the High Court and restore

that of the trial court. The appeals stand allowed

accordingly.